29 March: Just Another Day

There's some confusion over whether the 29 March might still be "Brexit Day", but that is not legally possible. 

Article 50 of the Treaty of the European Union governs how member states may leave - by giving two years' notice. The UK gave notice, but couldn't agree a deal in that time, so asked for an extension. The European Council decision on 22 March approving that request is a legal instrument that immediately extended the leaving date under Article 50(3) to either 12 April or 22 May 2019 (on certain conditions which the UK agreed). But even those deadlines could change - or disappear altogether.

If the UK's House of Commons does not approve the current draft of the withdrawal agreement during the week commencing 25 March 2019, the UK will leave the EU on 12 April 2019 unless before then: 

• The European Council, in agreement with the UK, unanimously decides on another extension to the Article 50 period; or 
• The UK revokes the Article 50 notice; or 
• A withdrawal agreement is concluded with a different commencement date. 

If the House of Commons approves the withdrawal agreement in the week commencing 25 March 2019, the UK will leave the EU on 22 May 2019. Certain other conditions apply, but these are the new dates. 

The Brexit saga is far from over.

UK Government Must Revoke Article 50 Notice By 11pm On 29 March

The UK Parliament has recently rejected both the UK's proposed withdrawal agreement with the EU and any potential 'no deal' scenario (which some refer to as 'trading on WTO terms'). Today, the government is asking Parliament to vote on whether it wishes the government to seek an 'extension' of the expiry date of the UK's "Article 50 notice" to withdraw from the EU, from 29 March to 30 June, which would require the unanimous consent of all other EU member states. This is both illogical and unnecessary.

The European Court of Justice has already ruled, however, that the UK can freely withdraw its Article 50 notice at any time before midnight UK time (11pm in Brussels) on 29 March, without needing any consent from the EU member states, and without preventing it from giving another notice at a later date.

An extension of the current Article 50 notice period is also pointless, since the EU will not negotiate the current 'deal' any further and Parliament will not allow a no deal situation. Relying on an extension to Article 50, which the EU has to agree to, is also surrendering the UK's sovereignty and control over the terms of any departure to the EU. Revoking Article 50 is soley within the UK's control and allows it to determine the timing of any second notice it might wish to give in due course.

Therefore, the only way for the government to deliver on Parliament’s “instructions” (a term that Theresa May likes to uses to refer to the non-binding EU referendum, so must accept when referring to ‘non-binding’ Parliamentary votes) in rejecting her 'deal' and ‘no deal’ is to revoke the Article 50 notice.

The Prime Minister complains that Parliament only states what it does not want, rather than what it wants. Yet she repeatedly presents Parliament with the same choice between her 'deal' and 'no deal' when it has rejected both, and now wants an extension to do that again. She cannot have it both ways. There must be no extension and the Article 50 notice must be withdrawn. 

Another government can always try to muster support for Brexit at a later date, as the ECJ has said is permissible.

Forever Blowing Debt Bubbles... When Will The Latest Burst?

I found myself watching The Big Short again on Saturday, and made a note to catch up on the current state of various debt bubbles that have cropped up in the news during the past few years. The signs are not good, given we're yet to recover from the ill-effects of the last financial crisis. Check 'em out...

UK consumer debt hit new heights in July 2018, and hit a new peak in January 2019, while household savings are at historically low levels. I wonder if there's an event about to hit UK consumers that we should be concerned about...?

Meanwhile, concerns about 'leveraged' corporate loans began circulating in 2018, and a fresh warning came from the OECD yesterday. Not only have companies with lower than investment grade credit ratings been borrowing a lot of 'cheap' money at low interest rates, but about 80% of such loans are also on terms that leave lenders much less protected than usual ('covenant-lite'). So if these less-than-investment-worthy corporate borrowers default, the proportion of loans recovered will be much lower than normal.

Again, is there an event looming that might add to financial stress for corporate Britain...?

Of course these leveraged loans are securitised or packaged into asset-backed securities ("ABS") known in this market as "collateralised loan obligations" or "CLOs") to enable investors to speculate in bonds based on the performance of these loans. I saw analysis last year that suggested recovery rates about 15% lower than lenders would typically expect. Here's a more detailed discussion on that from April 2018 - a picture which will no doubt have worsened since then...

Here’s another problem area: more Americans than ever are 90 days late in paying their auto loans, a trend now in its third year.

Of course, auto loans are also securitised into ABS so investors can speculate on the performance of the underlying loans. The issuance of bonds based on auto loans hit a post-financial crisis peak in 2017 and kept going. Here’s what was said about the ABS market for auto loans a year ago - well before 90 day delinquency hit record highs.

Fasten your seat belts...

Brexit: WTO Terms Are The Chasm, Not The Bridge!

Leave Means Leave campaigners like to say that "trading on WTO terms" is a "bridge" from EU membership to an EU free trade deal. 

Not true. But this helps paint a picture of exactly what Brexit really means.

The WTO was set up in 1995 as a way for all countries to agree ways to trade more freely with each other ("trade deals") and some very basic rules for fair trade if they cannot agree a trade deal ("WTO terms").

So think of "WTO terms" as the chasm or valley between two countries who want to trade with each other. 

It's a long way down, because those are the best/worst trading terms that all countries say should apply where there is no other deal agreed.

In other words, to improve on WTO terms, you need a "trade deal" between countries - like membership of the same regional or other type of free trade bloc (like the EU, for example) - or a "free" trade agreement between the trade bloc and a non-member country (like EU-Canada).

The free trade agreement or treaty (such as EU membership) is the bridge, and WTO terms is the chasm that the countries are trying to get their goods and services across. 

Right now, the UK's goods and services are trundling to and from the EU across the WTO chasm via the bridge of EU membership. And a wise government would not remove the bridge of EU membership without building an alternative bridge over the WTO chasm.

It takes 5 to 10 years to build a bridge over the WTO chasm. But after nearly 3 years of negotiation, Theresa May only managed to get until the end of 2020 - not long enough to build a new bridge, even if she had any real idea how to build it.

So, May's deal and No Deal both involve the UK not so much "driving off a cliff" but "falling into the WTO chasm" as the bridge of EU membership collapses.

The only way to avoid this is to revoke (withdraw) the Article 50 notice before it expires on 29 March and try to leave again later (if anyone can figure out how to do that safely).

The Marriage Of Patriotism And Intelligence: Low Expectations With A Chance Of Delight

I can't recall starting any year with lower expectations than I have for 2019.  But the Sun is up there somewhere, and may yet delight. We might even see a decent wedding for a change...

At any rate, 2018 ended so badly that I snatched up a book of Orwell's essays at the bookshop till for light relief. The essays included the excellent pieces Why I Write and Politics and the English Language. The latter should be required reading for Messrs Rees-Mogg and Hannan, by the way. Two of the most pompous people on Earth for whom Orwell may as well have written his essay while watching their lips move: 

The great enemy of clear language is insincerity. Where there is a gap between one's real and one's declared aims, one turns...to long words and exhausted idioms, like a cuttlefish squirting out ink... Political language...is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.

Nestled between these two venomous little works is Orwell's suggested antedote to fascism, The Lion and the Unicorn: Socialism and the English Genius, written in February 1941.

At this point, Corbynistas will hastily point out that Orwell's real name was Blair and he went to Eton. True enough, but you've already seen his opinion on the Rees-Moggs of his era; and in 1937 he was among the first to actually fight against fascism in Europe and later to advocate the kind of socialism that gripped Britain for decades after the war. Reality is too complicated for dogma.

It's also ironic that given the lengthy socialist experiment that occurred in Britain after the war, UK politics today should so clearly echo Orwell's 1941 view of UK politics in the 1930s. Hitler and Mussolini have been replaced by a wave of American-style Alt-Right Christian fundamentalist populists, while Putin looms out of Russia on the far left and various Islamic potentates ply their trade. UK foreign policy riven with appeasement, inconsistency and conflicts of interest - historically, backing Franco in Spain, arming the Italians and ignoring German rearmament and dithering until too late; now May rushing to hold hands with Trump and Erdogan, arming the Saudis and delivering on Putin's disruptive agenda, not only by pursuing Brexit and ignoring foreign political interference in UK politics from both left and right, but also by being the only conservative EU government to back Hungary's alt right leader. Meanwhile, in the UK, Orwell's "Blimp class" - "the halfpay colonel with his bull neck and diminutive brain, like a dinosaur..." has evolved into our gammon-like 'Brexiteers' and 'Leavers', while the left wing "Bloomsbury highbrow, with his mechanical snigger, is [again] as out-of-date as the cavalry colonel...".

And both eras share the same political stalemate:

Both Blimps and highbrows took for granted, as though it were a law of nature, the divorce between patriotism and intelligence [but] a modern nation cannot afford either of them. Patriotism and intelligence will have to come together again. It is the fact that we are fighting a war, and a very peculiar kind of war, that may make this possible.

In recommending a solution in 1941 that might win the war, Orwell doubted that Britain would be able to fuse patriotism and intelligence in order to resist fascism unless it fought a "revolutionary war" and became a "socialist democracy". He advocated six political goals that he thought would probably take decades to achieve but provide enough incentive to enough people to effectively unite the population (ignoring the small proportion of 'mere owners' of land and capital). Only the first two of his suggested goals are offered by anyone as policies today - namely, nationalising "land, mines, railways, banks and major industries" and limiting incomes so that the "highest tax-free income in Britain does not exceed the lowest by more than ten to one" - but everyone except the Corbynistas has learned from Britain's own disastrous post-war policies, as well as the unfortunate aspects of Russian, Chinese, North Korean and Venezuelan experiments that those goals are economically suicidal.

It remains true, however, that although the NHS is all that's left of its socialist experiment, Britain is much more of a socialist democracy than before the war. And Orwell was probably right about nationalisation to the extent that private sector control of the UK's major industries had to be made temporarily subject to the state's war effort and subsequent reconstruction programme.

Yet 80 years later we find that the apparent marriage of patriotism and intelligence for at least some of that period has ended in divorce.

I am not alone in thinking that the term "patriotism" in that context was misunderstood. Writing The Lion and The Unicorn in 1941, Orwell himself merely referred to patriotism as "national loyalty" and considered that Hitler and Mussolini rose to power because they recognised it as being a greater "positive force" than Christianity or socialism. But by 1945 their downfall had clearly caused him to consider the difference far more carefully (my emphasis added):  

Nationalism is not to be confused with patriotism... two different and even opposing ideas are involved. By ‘patriotism’ I mean devotion to a particular place and a particular way of life, which one believes to be the best in the world but has no wish to force on other people. Patriotism is of its nature defensive, both militarily and culturally. Nationalism, on the other hand, is inseparable from the desire for power. The abiding purpose of every nationalist is to secure more power and more prestige, not for himself but for the nation or other unit in which he has chosen to sink his own individuality.

Nationalism, in the extended sense in which I am using the word, includes such movements and tendencies as Communism, political Catholicism, Zionism, Antisemitism, Trotskyism and Pacifism. It does not necessarily mean loyalty to a government or a country, still less to one's own country, and it is not even strictly necessary that the units in which it deals should actually exist. To name a few obvious examples, Jewry, Islam, Christendom, the Proletariat and the White Race are all of them objects of passionate nationalistic feeling...

A nationalist is one who thinks solely, or mainly, in terms of competitive prestige. He may be a positive or a negative nationalist — that is, he may use his mental energy either in boosting or in denigrating — but at any rate his thoughts always turn on victories, defeats, triumphs and humiliations. He sees history, especially contemporary history, as the endless rise and decline of great power units, and every event that happens seems to him a demonstration that his own side is on the upgrade and some hated rival is on the downgrade.

But finally, it is important not to confuse nationalism with mere worship of success. The nationalist does not go on the principle of simply ganging up with the strongest side. On the contrary, having picked his side, he persuades himself that it is the strongest, and is able to stick to his belief even when the facts are overwhelmingly against him. Nationalism is power-hunger tempered by self-deception. Every nationalist is capable of the most flagrant dishonesty, but he is also — since he is conscious of serving something bigger than himself — unshakeably certain of being in the right...

From this description it is suddenly easy to see why "nationalism" - whether in the form of religious fundamentalism or a passion for a post-Brexit Britain - is not enough to sustain a marriage with intelligence, if they ever become truly married at all. Intelligence heads for the door as soon as nationalism is exposed by the facts and becomes dishonest. Intelligence cannot live with a lie. That process of exposure can take time, but it is inevitable. By contrast, "patriotism" does not involve any collision with the facts because it is not a quest for power and there is no need to impose a strongly held view on others. Plenty of happily married couples differ in their likes and dislikes - even find their differences funny - but the fun stops when one imposes a preference on the other.

Orwell avoided the question of how nationalism takes hold, although the fact that he was concerned to expose it as a writer spoke volumes, as it were; and later studies of German propaganda in the 1930s and modern day 'fake news' of the kind distributed in the 2016 Leave campaign - and even by the Tories in 'selling' Theresa May's Brexit 'deal' - show quite clearly how nationalist beliefs can be encouraged and spread widely where the facts are less available or less attractive.  Indeed, both Britain's main political parties are dominated by extreme "nationalists" who are holding the UK economy - and voters' own wellbeing - hostage to their own political views. Both seek to impose Brexit in the face of widespread agreement that even after 15 years of trying to put the impact behind it Britain will produce less than it would have by remaining in the world's largest trade bloc. "Fuck business!" says one Brexiteer, "people have had enough of experts" says another, while the 'opposition' even sought to ignore Brexit as an issue altogether - as if a smaller economy could magically spend more on neglected public services. If they succeed at this, their supporters will believe anything. Intelligence will be banished from the family home.

But I think Orwell's key insight was that nationalistic beliefs exist in everyone, and it takes moral effort to think clearly. 

The ...nationalistic loves and hatreds that I have spoken of... are part of the make-up of most of us, whether we like it or not. Whether it is possible to get rid of them I do not know, but I do believe that it is possible to struggle against them, and that this is essentially a moral effort. It is a question first of all of discovering what one really is, what one's own feelings really are, and then of making allowance for the inevitable bias. If you hate and fear Russia, if you are jealous of the wealth and power of America, if you despise Jews, if you have a sentiment of inferiority towards the British ruling class, you cannot get rid of those feelings simply by taking thought. But you can at least recognise that you have them, and prevent them from contaminating your mental processes. The emotional urges which are inescapable, and are perhaps even necessary to political action, should be able to exist side by side with an acceptance of reality.

In other words, it is fine for you to believe that London is "the best city in the world" to live in, for example, but you must accept that others' opinion and passions may differ in terms of their own experience of London, preference for other cities or indeed no city at all. You do not need to see the downfall of Leeds or Paris, or ensure the good residents of Scunthorpe are much worse off, in order to enjoy living in London (or indeed, the other way round). Equally, however, you must recognise that if the majority of people with day-to-day business responsibilities within the UK's financial, medical, pharmaceutical, scientific, automotive, aerospace, creative and other industries generally agree with the senior civil servants who have responsibilities in those areas that Britain will be worse off under any form of Brexit, then you must resist the temptation to keep insisting that Britain will somehow be better off...


On that note, I wish you a happy and prosperous 2019.

The Last Days Of The Brexiteers

As the UK Parliament begins five days of debate on whether and, if so, how the UK might leave the EU, four things tell you that we are seeing the last days of Theresa May and her merry band of Brexiteers. 

At stake is whether the UK (a) crashes out of the EU with no deal and has to rely on World Trade Organisation tariff rules ("No Deal"); (b) exits on the basis of May's daft draft Withdrawal Agreement and a vague commitment to a future trade deal on uncertain terms that won't cover everything yet binds the UK to follow EU rules with no influence ("May's Deal"); or (c) does not exit at all ("No Brexit").  

Here's why the result should be No Brexit:

"The economy, stupid"

After all the lies told during the Leave campaign, the government now admits that every form of Brexit will leave the UK economy smaller than it would be if the UK remains a member of the EU, even after 15 years of trying to make a go of it alone.

How dumb would any Member of Parliament have to be in order to deliberately vote to make the economy smaller?  That can only mean less money for everyone, whether they're workers or benefits recipients. Investors would reduce their investments in the UK because they would see lower returns from a less valuable economy. There'd be less money for both state pensions (because the tax take would be lower) and private pensions (because pension funds would see lower returns like other investors). An ageing population and stricter controls on immigration would mean higher taxes on a declining number of people in work (and fewer carers for the old folks).

Anyone feeling the pinch now will know Brexit Britain would be a far worse place to live.

The UK Can Revoke Article 50 Notice On Its Own, Free of Charge

The government has wasted a fortune on 5 QCs trying in vain to stop the European Court of Justice ruling on whether the UK on its own can cancel or revoke its notice to leave the EU. This morning, the Advocate General filed her opinion which recommends that the court find in favour of that claim. She says the UK can unilaterally revoke its Article 50 notice any time before it expires, by notice to the European Council, following UK parliamentary approval. 

The ECJ usually follows the Advocate General's opinion.

That means it is highly likely that the EU will be bound to accept that the UK Parliament can direct the government to notify the European Council that the Article 50 notice is revoked, in which case Brexit is over, free of charge. Simplez! 

And the Brexiteers' legal problems don't end there...

The Government's Own Legal Advice Does Not Help The Brexiteers

May's draft Withdrawal Agreement says that if the UK and EU can't agree a future trade deal within 2 years, the UK will remain in a customs union with the EU that it can't escape without EU agreement. Brexiteers suspect it might never escape (the 'backstop').

May claims this is just paranoid and the EU also wants the backstop to be temporary. But she's raised suspicions that this is yet another pork pie by refusing to release the legal advice on her daft Withdrawal Agreement, on the basis that disclosure is "not in the public interest". This is tosh. Not only is it perfectly normal to release the full terms of legal advice given to ministers (including the papers requesting that advice), in order to allow their decisions to be challenged by judicial review; but any client can also waive the right to claim legal professional privilege if disclosure of the advice would help it's case.  

So the mere fact that the government has refused to disclose the legal advice allows us to infer that, at the very least, the disclosure would not help the case for accepting May's Brexit plan. 

But the fact that the Attorney General is prepared to do time in the Parliamentary cells for contempt, tells you that the advice is probably very bad indeed.

Huge momentum for a People's Vote, Remainers Are Younger

Even if MPs don't have the cajones to do their job and simply direct the government to revoke the Article 50 notice, they can very likely rely on a referendum to give them a clear mandate to do so. 

The Labour Party says it should first go through the charade process of trying to win a vote of No Confidence in May's government to trigger a General Election, failing which it will seek a People's Vote. But given that a No Confidence motion requires more support, the odds are they'll have to go with a People's Vote.

The support for Remain has likely increased significantly.

Following the march by over 700,000 people in October, a petition requesting a People's Vote signed by 1.4 million was delivered to the Prime Minister's office yesterday.

It is predicted that by mid-January 2019 the number of surviving Remain voters after the 2016 referendum will exceed the number of surviving Leave voters.  

A Channel 4 poll of 20,000 voters last month found 54% in favour of Remain.

Lastly, any referendum tends to be a vote on the government. In 2016, the government of the day was on the Remain side of the debate and it's been suggested that many Leavers voted against the government out of protest at their being 'forgotten' rather than because they really wanted Brexit.  But this government would be on the Leave side of a People's Vote and has been so obsessed by Brexit that it has failed to solve people's problems from 2016 - and, if anything, has made those problems worse. Any 'protest vote' would therefore favour Remain.

The Short Tale Of Brexit Britain's First Unicorn!

While UK Prime Minister, Theresa May, the White Queen tours the nation selling jam tomorrow and jam yesterday – but never jam today, the Brexidiot European Research Group Tweedle brothers added to the general confusion by proudly revealing the first of many often-promised unicorns. 

Tweedlesmug and Tweedlejohnson announced the eagerly awaited development in a hastily convened joint press conference in Looking-Glass World before a crowd of 700,000 people shouting "No Brexit":

"With careful in-bweeding," the brothers read in unison from a prepared script, "an old bwidle and a thingy we found in mater's drawer, we have finally managed it. Behold, Bwitain's fiwst unicawn!!"

With that, the brothers tugged aside a curtain to reveal the product of their efforts.

The End.

Easy As 123: Politicising The BBC

The BBC's Brexit logo speaks volumes

Having provoked a minor breeze on Twitter about the BBC's support for Andrew Neil's shameful attacks on Carole Cadwalladr recently, I thought an explanatory post was in order.

The reason that the BBC finds itself 'politicised' in this way is not because the BBC is 'biased' - at least not in the sense of simply taking one side in any given debate.  It's down to how the BBC frames its coverage of major events in the first place.

The BBC seems to take its editorial course from what the UK government (in this case) has decided to do. It then seeks to maintain 'balance' by covering all sides in the debate about how the UK should do what the government has decided, leaving behind the question whether the UK should be doing the thing at all. 

Viewing the whole Brexit scenario through the BBC's lens, therefore, means that the numerous investigations into collusion between Leave campaigns, where their funding came from and how they abused people's personal data become irrelevant to the BBC's Brexit coverage. So, too, are marches to secure a 'People's Vote'. Because those things relate to whether the UK should leave the EU, not how the UK should go about leaving - even when stopping the process remains an option.

This is not to say the BBC completely ignores the Electoral Commission fines, Information Commissioner fines and the launch of investigations by the National Crime Agency, the Metropolitan Police and the Financial Conduct Authority into the affairs of Mr Banks and various other members of the Leave Campaign and Brexit community - not to mention all the lies, distortion and gaslighting that was involved. But the BBC treats these as historic issues related to the EU referendum, electoral reform, how personal data might be abused in elections more generally and, perhaps, the role of truth in politics. From the BBC's standpoint, they shouldn't form part of its Brexit coverage because they don't relate to how the UK leaves the EU. 

This is appalling for at least four reasons. 

Primarily, it becomes really easy for the UK government to "get the BBC on side" and use its vast resources as the government's own public address system when attempting something that is likely to prove hugely complex and controversial. The government simply has to decide to do it: invade Iraq, trigger Article 50 without a plan for how to leave the EU, ignore the Good Friday Agreement... 

Secondly, the BBC's editorial choice minimises dissent by removing the oxygen of publicity from those who are sceptical or critical of the government's decision; and diverting it to those who are broadly supportive of the outcome, even if they wish to quibble over how the government achieves that goal. This allows the likes of Andrew Neil to treat the diligent efforts of Carole Cadwalladr and other investigative journalists as irrelevant, at best.

Thirdly, by moving the focus away from how the government made its decision in the first place, the BBC's emphasis risks burying evidence of corruption and so on. The end has justified the means. This encourages the likes of Andrew Neil to declare that continuing to investigate evidence of corruption and other criminality in relation to those means is somehow 'mad'.

Finally, the BBC's approach means that its reputation (and licence-fee payers' investment in that reputation) is horribly exposed to the downside of major events - or the reversal of the government's decision. The bigger the downside, or the more significant the reversal, the greater the damage to the BBC's reputation. 

What should the BBC do?

Avoid setting its editorial policy to simply accord with what the UK government (in this example) wants to do - even if that is, or is presented as, "the will of the people". 

The BBC's role should simply be to educate "the people" about the options, their implications and consequences of decisions taken. This is not about being able to say "I told you so" - it's about the BBC re-establishing and maintaining its role as an apolitical, trusted source of news and information, so that the people aren't so easily hoodwinked.

UK Govt Gives Consumers and Cross-border Traders a Dose Of #BrexitReality

Friday is never always the best day for the UK government to call people's attention to important issues. And so it proved with the critical alert on the impact of a 'No Deal' Brexit on your consumer rights. But just in case you did happen to be more concerned with wrapping up your week or queuing all day for a phantom train to your weekend destination, here's at least one key paragraph amongst all the gumph pearls of bureaucratic wisdom:

As the UK will no longer be a Member State, there may be an impact on the extent to which UK consumers are protected when buying goods and services in the remaining Member States. The laws of those states are similar but may differ in some areas to UK law both as respective laws evolve over time as well as due to differing levels of harmonisation between Member States in some areas. UK consumers will also no longer be able to use the UK courts effectively to seek redress from EU based traders, and if a UK court does make a judgement [er, judgment for court decisions], the enforcement of that judgement (sic) will be more difficult as we will no longer be part of the EU. In addition, there will no longer be reciprocal obligations on the UK or EU Member States to investigate breaches of consumer laws or take forward enforcement actions... UK consumers would need to seek redress through the courts of that state rather than UK courts.

There's also some fantastic news for consumers and businesses on some specific areas:

1. Alternative Dispute Resolution and Online Dispute Resolution;
2. Package travel;
3. Timeshare;
4. Textile labelling; and
5. Footwear labelling

some of which is in Annex A.

Of course, the paper omits any helpful links to warnings from the governments of the remaining 27 EU member states to their consumers about dealing with UK traders. I guess that information is being held back for another Friday...

In Brexit Britain Retail Will Be Mainly Online

When high street goods retailers call for increased taxes on e-commerce to subsidise their local business rates, you know their business models no longer make sense. Online retail sales now represent 17% of total retail sales in the UK, up from 5% in 2008. E-commerce is steadily taking over and UK consumers cannot afford to resist. Consumer debt is at its highest in history. So, add the rise in zero hours contracts with a Brexit headwind, and the shift to mainly online sales of goods should happen even faster. That in turn should boost the market for online sales more generally.

In typically populist fashion, all the usual suspects are blaming someone else. Tesco’s CEO has dubbed his plea for a 2% tax on any goods sold online an “Amazon tax”. He reckons this would raise a meagre £1.25bn but wants that spent on lowering the business rates for his physical stores. In other words, like newspapers, he doesn't make enough through his own online sales to subsidise his own under-performing bricks-and-mortar. 

Such a small sum will barely touch the sides within Tesco, yet it will increase all consumer prices for the ever-increasing volume of online sales. But the UK's over-indebted consumers simply can't afford that - and even if unemployment remains low, the number of zero hours contracts has tripled to account for a quarter of employment growth, and 2.8% of overall employment.

 

Similarly flawed is the UK Chancellor's populist "threat" that tech companies face a “digital services tax”.  It sounds good, but will be futile to protect UK offline retailers and simply raise consumer prices that won't be affordable.

The problem is high street retailers' failure to adapt to the long term trend of rising online sales. You can't blame that on the tax system. Taxes are something businesses have to factor into their planning, not the other way round. And taxes should be technology neutral, rather than making consumers and taxpayers subsidise legacy technology over innovative competition.

So, the sale of goods on the UK high street is doomed as we know it. But as they adapt or fade away, e-commerce for goods should boom. That will boost the market for directly related online services, such as point of sale finance, as well as the market for online services more generally.

Brits Look Away Now: Free Movement Of Non-Personal Data In the EU

The EU's "Digital Single Market" strategy has been boosted by an agreement to remove requirements for non-personal data to be stored in any one EU member state. The new law, approved in plenary by 520 votes to 81, with six abstentions, is due to be approved by the EU Council of Ministers on 6 November. It will apply six months after its publication in the EU Official Journal.

Restrictions on the free movement of personal data have long been relaxed under the EU data protection framework. The latest move is expected to double the value of the EU data economy to 4% of GDP by 2020.

The agreement builds on a report into "Building a European Data Economy",  statistics on the use of cloud computing by businesses, a study on the legal and administrative restrictions on the free flow of non-personal data (often mistaken) and study of the economic benefits of cloud computing uptake and free flow of data within the EU.

In summary, the agreement means that:

• public authorities cannot impose "unjustified" data localisation restrictions;

• the data remains accessible for regulatory and supervisory control even when stored or processed across borders within the EU;

• cloud service providers are encouraged to develop self-regulatory codes of conduct for easier switching of provider and porting data back to in-house servers, by mid-2020;

• Security requirements on data storage and processing remain applicable when businesses store or process data in another Member State or outsource data processing to cloud service providers;

• Single points of contact in each Member State will liaise with other Member States’ and the Commission to ensure the effective application of the new rules. 

EU Acts To Cut Fees For Cross-Border Payments In Non-Eurozone Member States

The pesky EU is at it again, this time trying to level the playing field for EU consumers and businesses by putting an end to the high cost of cross-border payments in currencies of Member States outside the Eurozone. Only Sweden took up the option to align the fees charged for those cross-border payments in Swedish krona with fees for krona payments within Sweden. Other non-Euro area countries, like the UK, did not oblige their banks to invest in the systems to do this. So, the European Commission is proposing a regulation to force banks in those Member States to cut their fees.

I've experienced the problems personally, as would anyone doing business across borders, travelling for business or pleasure, or shopping internationally online.

Business payments

Expecting the worst from Brexit (but hoping the whole fiasco will end with the UK remaining in the EU), I've added an Irish side to my business. That means getting paid in Euros and changing into GBP (if the funds are needed in the UK at all). To receive international payments to my GBP business bank account, my bank says I need an extra current account on its commercial banking platform (which I won't be able to see through the online access to my normal business current account). For that extra account, I'll have to pay £20 a month, plus their charge for converting each payment, plus their margin on the foreign exchange rate.

Compare that to £0 for receiving a UK payment in GBP to my existing, fee-free UK current account!

A study by Deloitte revealed other examples that punish small and medium sized businesses, as well as consumers.  It costs €24 to send €500 from Bulgaria to Finland, for instance, but sending €500 from Finland to France is like any normal payment within Finland or France - which is what the Commission wants to see in the non-Euro area.

Travelling or shopping

On a more personal level, you'll also be familiar with the tedious additional "choice" that everyone is forced to make when the currency of their payment card is different to the local currency. It's not so intrusive online, but a real pain for both you and the person serving you in a crowded shop, bar or restaurant. You have to be asked, or indicate on the card terminal whether you want (a) the "dynamic currency conversion" option, to pay in the currency of your card (at an unspecified rate that may include both margin for the local bank service provider and 'spread' for the retailer); or (b) to pay in the local currency, taking the risk that the conversion rate via the card scheme and your own bank's foreign transaction charge (if any) that you eventually see on your card statement will mean you're at least no worse off than whatever the local conversion rate was.

In this case, the Commission is proposing a short term cap on conversion costs, then a new model that shows you the actual cost of those options before you choose one.

After all, it's just data, folks! 

Cost Savings

The Commission found that extending the new rule from Euro transactions in the Eurozone to non-Eurozone Member States will save the affected customers €900m a year. That's because (a) the banks already have access to the modern system required, (b) at least 60% of cross-border transactions in the non-Eurozone Member States occur in Euros and (c) the cost of domestic transactions in those states is already low and couldn't be raised to subsidise the savings on the cross-border Euro transactions under competition rules.

It's worth noting that Eurozone banks did not raise fees when the first controls were imposed on cross-border payments in Euros - and in fact charges steadily decreased. Nor did Swedish service providers suffer when Sweden opted to extend the scheme to the krona.

Personally, I'm going to ignore the bank for my Euro payments until it gets its house in order - which might be never anyway. Even if the Euro/GBP conversion charge drops to zero, I'm sure it will still oblige me to take the commercial account on the more expensive platform and pay £20 a month for the privilege. It will argue that the move to a new current account does not relate to any single payment transaction or conversion, even though that's the only purpose I'd be taking the extra account.

No, what I'm going to do instead is open an account with one of the new foreign currency providers, so that a law firm can pay the provider in Euros, and the provider will pay me in GBP for a small, flat fee. 

FinTech wins again!

Ah, but Brexit...

Of course, all bets are off if the UK leaves the EU and decides to diverge from the EU trade rules relating to financial services.

In that case, banks - like telecoms companies who hate the EU's limit on roaming charges - will heave a sigh of relief.

Big business doesn't refer to the UK as "Treasure Island" for nothing!

The Irony Or The Ecstasy? The UK Centre For Data Ethics And Innovation

You would be forgiven for uttering a very long string of properly ripe expletives on learning that the current UK government has the cheek to create a "Centre for Data Ethics and Innovation"!  Personally, I think they've missed a trick with the name. With a little more thought, the acronym could've been "DECEIT" - and maybe in some languages it would be - so let's go with that.

You might say that it's better to have, rather than not have, an 'independent' policy body focused on the use of data and "artificial intelligence", even if it's set up by a government controlled by those who masterminded and/or benefited from the most egregious abuse of data ethics in UK history.

Or you might be relieved by the notion that it's easier for the dominant political party of the day to control the ethical agenda and results achieve "the best possible outcomes" if the source of policy on data ethics is centralised, especially within a body being hastily set up on the back of a quick and dirty consultation paper released into the febrile, Brexit-dominated summer period before any aspirational statutory governance controls are in place. 

At any rate, we should all note that:

"[DECEIT], in dialogue with government, will need to carefully prioritise and scope the specific projects within its work programme. This should include an assessment of the value generated by the project, in terms of impact on innovation and public trust in the ethical use of data and AI, the rationale for [DECEIT] doing the work (relative to other organisations, inside or outside Government) and urgency of the work, for example in terms of current concerns amongst the public or business."

...

"In formulating its advice, the Centre will also seek to understand and take into consideration the plurality of views held by the public about the way in which data and AI should be governed. Where these views diverge, as is often the case with any new technology, the Centre will not be able to make recommendations that will satisfy everyone. Instead, it will be guided by the need to take ethically justified positions mindful of public opinion and respecting dissenting views. As part of this process it will seek to clearly articulate the complexities and trade offs involved in any recommendation."

Political point of view is absolutely critical here. This UK government does not accept that the Leave campaign or Cambridge Analytica etc did anything 'wrong' with people's data. Senior Brexiteers say the illegality resulting in fines by the Electoral Commission and further investigation by the ICO and the police are merely politically motivated 'allegations' by do-good Remainers. Ministers have dismissed their own "promises" (which others have called "fake news" outright lies and distortion) as merely "a series of possibilities". There is no contrition. Instead, the emerging majority of people who want Brexit to be subjected to a binding vote by the electorate are regarded as ignoring "public opinion" or "the will of the people" somehow enshrined forever in a single advisory referendum in 2016; and as therefore expressing merely "dissenting views".

Against this gaslit version of reality, the creation of DECEIT is chilling.

Meanwhile, you might ask why there needs to be separate silo for "Data Ethics and Innovation" when we have the Alan Turing Institute and at least a dozen other bodies, as well as the Information Commissioner, Electoral Commission and the police. Surely the responsibility for maintaining ethical behaviour and regulatory compliance are already firmly embedded in their DNA?

I did wonder at the time of its formation whether the ATI was really human-centric and never received an answer. And it's somewhat worrying that the ATI has responded to the consultation with the statement "We agree on the need for a government institution to devote attention to ethics". To be fair, however, one can read that statement as dripping with irony. Elsewhere, too, the ATI's response has the air of being written by someone with clenched teeth wondering if the government really knows what it's doing in this area, anymore than it knows how to successfully exit the EU:

We would encourage clarity around which of these roles and objectives the Centre will be primarily or solely responsible for delivering (and in these cases, to justify the centralisation of these functions), and which will be undertaken alongside other organisations.

... We would encourage more clarity around the Centre’s definitions of AI and emerging technologies, as this will help clarify the areas that the Centre will focus on.

Reinterpreting some of the ATI's other concerns a little more bluntly yields further evidence that the ATI smells the same rat that I do:

• DECEIT will have such a broad agenda and so many stakeholders to consider that you wonder if it will have adequate resources, and would simply soak up resources from other stakeholders without actually achieving anything [conspiracy theorists: insert inference of Tory intent here, to starve the other stakeholders into submission];
• the summary of "pressing issues in this field" misses key issues around the accountability and audibility of algorithms, the adequacy of consent in context and whether small innovative players will be able to bear inevitable regulations;
• also omitted from the consultation paper are the key themes of privacy, identity, transparency in data collection/use and data sharing (all of which are the subject of ongoing investigation by the ICO, the police and others in relation to the Leave campaign);
• the ATI's suggested "priority projects" imply its concern at the lack of traction in identifying accountability and liability for clearly unethical algorithms;
• powers given to DECEIT should reinforce its independence and "make its abolition or undermining politically difficult";
• DECEIT's activities and recommendations should be public;
• how will the "dialogue with government" be managed to avoid DECEIT being captured by the government of the day?
• how will "trade offs", "public opinion" and "dissenting views" be defined and handled (see my concerns above)?

I could add to this list concerns about the government's paternalistic outlook instead of a human-centric view of data and technology that goes beyond merely 'privacy by design'. The human condition, not Big Tech/Finance/Politics/Government etc, must benefit from advances in technology.

At any rate, given its parentage, I'm afraid that I shall "remain" utterly sceptical of the need for DECEIT, its machinations and output - unless and until it consistently demonstrates its independence, good sense, not to mention ethics. 

For Your Personal Brexit Preparations: Which EU Countries Allow Dual Citizenship?

While I hope Brexit will be stopped, I'm expecting and preparing for the worst. So, with only two months before the EU approval process would need to start and Brexidiots in charge on the UK side, I'm expecting the UK to 'crash out' on 29 March 2019, without agreeing the terms of withdrawal (let alone any deal on future trade).

As a self-employed lawyer, there's both the professional and personal angles to consider.

Professionally, my UK legal qualifications will no longer be recognised in the EEA. So, I need to get qualified in an EEA state in order to continue credibly advising my UK clients on their EEA business activities, and advise my EEA clients on their UK activities. The only realistic option is adding an Irish legal practising certificate and consulting through an Irish law firm. Ireland will be the only truly common law jurisdiction left in the EEA, as both Malta and Cyprus have a mix of civil and common law, and it's laws are still very similar to the law in England and Wales.

That rather costly process is well underway, as previously explained.  

But that doesn't mean I personally have the right to live in Ireland, of course. So the question remains whether I could replace my UK right to live and work anywhere in the EEA by means of citizenship in the remaining 27 EU member states or one of the 3 EEA member state (Norway, Iceland or Liechtenstein) - without losing my UK and Australian passports? 

As the EU Parliament research reveals, there are differing national approaches to being or becoming a citizen of the various EU member states. But the key issue is whether your favoured country allows you to retain your UK (or other) citizenship. For instance, the following countries would require you to give up your UK citizenship in order to become a citizen there:

• Austria 
• Bulgaria 
• Croatia 
• Czech Republic
• Denmark 
• Estonia 
• Germany
• Latvia 
• Lithuania 
• Netherlands 
• Slovenia 
• Spain

So there goes any chance of moving to, say, Barcelona or Mallorca without first becoming a citizen elsewhere in the EEA.

Unfortunately, given the dual nationality of my spouse and children, of the 3 additional EEA countries, only Norway requires you to renounce your other citizenship(s) if you wish to become a citizen there (i.e. rather than automatically having it by birth etc) -  although a change in the law has just been submitted to the Norwegian parliament. 

Otherwise, the options are as follows (excluding those where the EU research says you can still later lose your citizenship by living somewhere else):

• Belgium
• Cyprus 
• Finland 
• France 
• Greece 
• Hungary 
• Ireland 
• Italy 
• Luxembourg 
• Malta 
• Poland 
• Portugal 
• Romania 
• Slovakia 
• Sweden

and 

• Iceland
• Liechtenstein 

Remember, any port in a storm...

Brexit Britain Has Plenty of Adolf von Kleists But No Hernando Cruz

In his short novel, Galápagos, Kurt Vonnegut looked back a million years from 1986 on the extinction of the human race as we know it, tracing the plight of the passengers and crew on an environmental tour to the famous islands, billed "The Nature Cruise of the Century". Half way through, Vonnegut describes the critical moment when the highly experienced Hernando Cruz, having supervised the delivery and outfitting of the doomed Bahía de Darwin, suddenly abandons the cruise to save his family, leaving the final voyage in the hands of the ignorant, incompetent buffoon, Adolf von Kleist:

"If 'the Nature Cruise of the Century' had come off as planned, the division of duties between the Captain and his first mate would have been typical of the management of so many organizations a million years ago, with the nominal leader specializing in sociable balderdash, and with the supposed second-in-command burdened with the responsibility of understanding how things really worked, and what was really going on.

The best-run nations commonly had such symbiotic pairings at the top. And when I think about the suicidal mistakes nations used to make in olden times, I see that those polities were trying to get along with just an Adolf von Kleist at the top, without an Hernando Curz. Too late, the surviving inhabitants of such a nation would crawl from the ruins of their own creation and realize that, throughout all their self-imposed agony, there had been absolutely nobody at the top who had understood how things really worked, what it as all about, what was really going on."

Sound familiar?

Where Will You Be On 30 March?

You might be hoping for an end to Brexidiocy, but unless you've been hiding under a rock, you'll be expecting that the UK will leave the EU without agreeing how to do so in an orderly fashion. 

That means EU trade terms will cease to apply in 8 months' time, as of 30 March.

The European Commission is more advanced in its preparations for Brexit, as the remaining 27 member states ('the EU27') will expect officials to enforce the UK's exclusion from the EU trade bloc and the European Economic Area (the EU, plus Norway, Liechtenstein and Iceland). 

The EU says there are 7 possible steps everyone might need to take, regardless of where they live. The EU has also published its Brexit preparations, including certain "preparedness notices" as well as legislation and other activities, like risk management.

My own preparations involve adding a legal practising certificate for Ireland and signing up with an Irish law firm to keep advising my clients on their EU-facing operations and the EU aspects of cross-border data protection issues. That's step 3 on the EU's top tips for Brexit.

Given that the UK government is planning on the basis of shortages in food and medicine, I'm also inclined to recommend that the family takes advantage of my wife's dual citizenship to relocate for a month or two until things settle down, if indeed they ever really do.

But I think we'll end up toughing it out in London, where I hope the evidence of the UK's continuing decline will be gradual, rather like when the Romans left Britain 1600 years ago. Over the next 40 to 60 years money will cease to circulate widely and the bulk of the population will abandon stone and concrete buildings for wooden huts and tents before they largely succumb to famine and disease...

Inevitably, however, another batch of Europeans will eventually arrive, attracted to the underpopulated wasteland on their frontier. Perhaps they'll bring wine, pasta, hair pins and exotic perfumes, a method for conveying water over long distances and sponges for toiletry use...

Then the whole, sorry cycle will repeat itself, post nauseam.

If You Need Consent To Process My Personal Data, The Answer Is No

... there are plenty of reasons for businesses and public sector bodies to process the data they hold about you, without needing your consent. These are where the processing is necessary for:

• performing a contract with you, or to take steps at your request before agreeing a contract; 
• complying with their own legal obligation(s); 
• protecting yours or another person's vital interests (to save your life, basically);
• performing a task in the public interest or in the exercise of their official authority; 
• their 'legitimate interests' (or someone else's), except where those interests are overridden by your legitimate interests or your fundamental rights which require protection of personal data. 

The General Data Protection Regulation lists other non-consent grounds apply where your personal data is more sensitive: relating to criminal convictions and offences or related security measures; or where it reveals racial or ethnic origin, political opinions, religious or philosophical beliefs, trade union membership; or it is genetic or biometric data for the purpose of identifying only you; or data concerning health or your sex life or sexual orientation. National parliaments can add other grounds in local laws.

These non-consent grounds for processing are all pretty reasonable - and fairly broad. So, if you don't have the right to process my personal data on one of those grounds, why would I want you doing so?

This would seem to herald a new era in which the Big Data behavioural profiling/targeting/advertising model begins to decline, in favour of personal Apps (or open data spiders) that act as your agent and go looking for items in retailers' systems as you need it, without giving away your personal data unless or until it is necessary to do so...

Brexit, Syria and The Political Opportunity Donut

There are many ways to draw the political spectrum, but most of the time we talk about "Left" and "Right" as an endless series of tiny but increasing differences stretching in both directions - a political continuum. 

And most of the time that works - especially for "Yes"/"No" issues - since voters' views will be similarly grouped. There's not much pressure on the tiny differences or cracks among the political views on each 'side'.

Then something very complex and uncertain comes along - like Brexit or the latest chemical weapons attack by the Syrian government on 'rebels' as well as its own citizens that highlights all the problems in the Middle East in one hit. 

Suddenly those on the "Far Left", like Jeremy Corbyn, find themselves sitting cheek by jowl with those on the "Far Right", like Jacob Rees-Mogg or Nick Griffin. 

The longer these situations last, the greater the pressure on the usually tiny cracks between politicians and voters on each side. 

And as the pressure increases, those tiny cracks widen to the point that politicians begin to worry about which way they might need to leap for their political survival...

Hardliners toughen their stance, looking for ever more extreme views to hold. This rams home to the more moderate politicians just how far from the centre they've drifted, and causes them to look for ways to move back that way.  So, for example, you have growing numbers of Brexit 'rebels' in both the Labour and Tory parties, with the Liberal Democrats offering to scuttle Brexit altogether...

Here's what a former master of centrist politics, Tony Blair, said today:

"If you leave that vast, uncultivated centre ground,

someone is going to come along and cultivate it."

In other words, don't ignore the other side of the donut.

Two Holy Grails For Cross-border Payments: Access and Interoperability

A new international banking report admits to continuing problems in making payments from one country to another, but points to improvements. The report is based on a detailed analysis of the market, a survey of about 100 service providers and workshops with stakeholders from the supply side and the demand side (end users). Efforts to widen access to online payment accounts and prepare the way for the interoperability of payment systems/networks, closed-loop systems and crypto-currencies would seem the most fertile ground for achieving quicker, cheaper and more transparent cross-border retail payments.

Findings include:

• Cross-border retail payments are generally slower, less transparent and more expensive than payments within the same country. 

• Even large corporate users making high-value and/or frequent payments experience a lack of transparency and uncertainty over settlement timing and exchange rates. 

• Smaller businesses and individuals who typically make smaller, less frequent payments are more concerned about access to services and high costs.

• Users' priorities depend on their particular circumstances and requirements, so choice of different options and features is critical.

• Most users have choice as to who provides their payment services but individuals without access to transaction accounts lack access to many initiatives that have improved convenience and speed for other users. So, progress towards providing universal access to (online) transaction accounts is likely to provide more options to those who currently rely on cash.

• Back-end service providers themselves have problems with messaging, clearing and settlement of cross-border retail payments. There is little choice among back-end clearing and settlement methods, with the only feasible option often being correspondent banking rather than, say, ensuring the linking or interoperability of payment systems/networks, closed-loop systems and peer-to-peer distributed ledger technologies (e.g. crypto-currencies). So, progress towards harmonised messaging standards and simultaneous trading and settlement of different currencies will help solve problems here and could result in quicker, cheaper and more transparent cross-border retail payments.